What Is A Structured Settlement Payment Buyout?
When you receive a structured settlement, you're set up as the recipient of an annuity - a set amount of money to be paid out over a certain amount of time. This can be a very long term arrangement or a shorter one, but you don't get all of your money at one time. Over time, you will continue receiving the same amount, but that amount will buy less over time. Many individuals find it in their best interest to get cash in hand now rather than wait for ten or twenty years' worth of payments to come through.
Scheduled structured settlement payments can provide some peace of mind, but some find a lump sum to manage their financial needs can be better for their personal situation.
With a structured settlement payment buyout, a financial firm arranges to buy your structured annuity from you. It's a trade of sorts. The financial firm will acquire your annuity worth whatever amount per year and you will then receive a lump sum payment up front. By determining the buyout percentage, which is also referred to as a discounted rate, it's then that an offered is made.
In other words, you'll be giving up the stream of payments you might have received from a malpractice suit or lawsuit settlement and instead you'll receive a bit payout up front. Once you've received a lump sum payment for your structured settlement, you will no longer receive the regular payments - you will have the large amount to use as needed instead.
To provide full disclosure, a company buying your structured settlement payments does not pay the full value in exchange for the buy out. They provide a reasonable percentage of it and they will wait the length of the term to collect its value. This is an investment for them, and a way for you to cash out when you have a structured settlement and need cash now.
How Much Is My Structured Settlement Worth?
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